Penalties After Incorporation under Companies Act, 2013 – Part I

Updated on : Sep 02, 2022 - 08:36:40 PM

08 min read.

The Companies Act 2013 lays down strict rules for the way the business and management is to conduct itself. Failure to comply with these rules and guidelines can attract some penalties, some which may include civil and criminal liability. This article is the first part of a two-part series on penalties after the incorporation of a company. This part covers penalties from Chapter VII-Chapter XII.

Section No and Description	Defaulting party	Civil Liability	Criminal Liability (Imprisonment)
Sec 88 – Failure to maintain a register of members/debenture-holders/security holders	Company and Every officer in default	INR 3 Lakhs for the company and INR 50 thousand for each officer in default
Sec 89 – Failure to make a declaration in respect of a beneficial interest in any share. Failure to file return pertaining to the declaration with the registrar.	Company and Every officer in default.	Max: INR 5 lakh for the company Max: INR 2 lakh for every officer in default Max: INR 1 thousand for every day of default.
Sec 91- Closure of register of members or debenture holders or other security holders without notice/shorter notice/ in excess of limits prescribed.	Company and Every officer in default.	INR 5 thousand for every day of default Max: INR 1 Lakh
Sec 92 – Failure to file annual return.	Company Every officer in default.	Min: INR 10 thousand Max: INR 2 Lakhs for a company Max: INR 50 thousand for every officer in default Max: INR 100 for every day of default.
Sec 94 – Refusal of Inspection or making a copy/extract.	Company and Every officer in default.	INR 1 thousand for every day of default Max: INR 1 Lakhs
Sec 99- Default in complying with Sec 96 – AGM Sec 97 – Power of the tribunal to call AGM and Sec 98 – Power of a tribunal to call meetings of members OR Orders of Tribunal.	Company and every officer in default	Max: INR 1 Lakh Further INR 5 thousand for every day of default
Sec 102 – Failure to comply with provisions related to statement to be annexed to notice calling a meeting	Every promoter/director/manager/KMP in default	INR 50 thousand or 5 times the benefit accruing to the persons mentioned in column (2) or any of the relatives, Whichever is higher
Sec 105 – Failure to mention members eligibility to appoint a proxy. Wilfully/knowingly issues the invitation to appoint a proxy.	Every officer in default	Max: INR 5 thousand
Sec 111 – Failure to circulate members’ resolution	Company and every officer in default	INR 25 thousand
Sec 117- Failure to file the resolution and agreement.	Company and Every officer in default (including liquidator)	Min: INR 10 thousand and Max: INR 2 Lakhs for company Min: INR 10 thousand and Max: INR 50 thousand for every officer in default
Sec 118 – Failure to maintain the minutes of proceedings of the general meeting, meeting of Board of Directors and other meeting and resolutions passed by postal ballot. Guilty of tampering with the minutes of the proceedings of the meeting.	Company and Every officer in default	Failure to maintain the minutes – INR 25 thousand for the company INR 5 thousand for every officer in default Guilty of tampering – Min: INR 25 thous Max: INR 1 lakh	Max: 2 years
Sec 119 – Refusal to inspect or copies not furnished within the specified time.	Company and Every officer in default	INR 25 thousand for the company INR 5 thousand for every officer in default
Sec 121 – Failure to file the report on AGM before the expiry of a specific period.	Company and Every officer in default	For a company a Min: INR 1 lakh and Max: INR 5 Lakhs and for every officer in default Min: INR 25 thousand Max: INR 1 Lakh
Sec 124 – Default in complying with provisions related to Unpaid Dividend Account	Company and Every officer in default	For a company a Min: INR 1 and Max: INR 10 Lakhs and for every officer in default Min: INR 25 thousand Max: INR 2 Lakhs
Sec 127- Punishment for failure to distribute dividends.	Every director in default Company	INR 1 thousand for every day of default & Simple Interest @ 18% p.a during the period for default continues	Max: 2 years
Sec 128 – Failure to comply with the provision relating to maintenance of books of accounts etc by the company.	Managing director , Whole-time director in charge of finance, Chief Financial Officer or such other person	Min: INR 50 thousand Max: INR 5 Lakh
Sec 129 – Failure to comply with provisions relating to proper disclosure of financial statements	Managing director, Whole-time director in charge of finance, Chief Financial Officer or such other person in charge (as appointed by the board in the absence of any of the officers mentioned, all directors)	Min: INR 50 thousand Max: INR 5 Lakh	Max: 1 year
Sec 134 – Contravention of the provisions relating to Financial Statements, Boards Report Etc	Company and Every officer in default	INR 3 lakh for the company and INR 50 thousand for every officer in default
Sec 136 – Denial of the right of the member to inspect copies of the audited financial statements.	Company and Every officer in default	INR 25 thousand for the company and INR 5 thousand for every officer in default
Sec 137- Failure to file the copy of financial statements with the registrar.	Company and Managing Director and Chief Financial officer (In their absence any director charged by the board with the responsibility. In the absence of such director, all directors)	Min: INR 10 thousand and Max: INR 2 lakh for the company Min: 10 thousand and Max: INR 50 thousand for officers mentioned in column (2)
Sec 140- Failure of the auditor to file the notice on resignation, with the company and registrar & also the C&AG in case of government companies. The right of representation abused/auditor has acted in a fraudulent manner	Auditor	Min: INR 50 thousand Max: INR 2 Lakhs
Sec 143 – Failure of the auditor to report fraud by employees against the company	Auditor, Cost Accountant or Company Secretary	In case of a listed company, INR 5 lakh and in case of any other company, INR 1 lakh
Sec 147 – Contravention of Sec 139 to 146 (aspects related to audit and auditors)	Company and Every officer in default Auditor Auditor	Min: INR 25 thousand and Max: INR 5 Lakhs for a company Min: INR 10 thousand and Max: INR 1 Lakh for every officer in default
Sec 148 – Default in complying with the orders of the Central Government pertaining to cost audit	Company and Every officer in default and Cost Auditor	Min: INR 25 thousand and Max: INR 5 Lakhs for a company Min: INR 10 thousand and Max: INR 1 Lakh for every officer in default Min: INR 25 thousand and Max: INR 5 Lakhs for cost auditor
Sec 157 – Failure by the company to inform DIN to Registrar.	Company and Every officer in default	Min: INR 25 thousand Max: INR 1 Lakh for company and Min: INR 25 thousand Max: INR 1 Lakh for every officer in default
Sec 159 – Contravention of: Sec 152- appointment of directors, Sec 155-Prohibition to obtain more than one DIN and Sec 156-Director to intimate DIN	Individual/Director	INR 50 thousand or Further, a fine of INR 500 for every day of default
Sec 165 – Contravention of maximum no. of directorships	The person accepting appointment as director	INR 2 thousand for every day during which the contravention continues Max: INR 2 lakh
Sec 166 – Contravention of duties of directors.	Director	Min: INR 1 Lakh Max: INR 5 Lakhs
Sec 167 – Functioning as director after attaining disqualification.	Director	Min: INR 1 Lakh Max: INR 5 Lakhs
Sec 172 – No specific punishment under chapter XI	Company & every officer in default	Min: INR 50 thousand Max: INR 5 Lakhs
Sec 178 – Contravention of provisions of Sec 177 related to Audit committee and nomination and remuneration committee and stakeholders relationship committee	Company and Every officer in default	Min: INR 50 thousand and Max: INR 3 Lakhs for company and Max: INR 1 Lakhs for every officer in default
Sec 182- Political contribution made in excess of the limits	Company and Every officer in default	5 times the amount contributed	Max: 6 months
Sec 184 – Failure to disclose interest held by directors in any company/contract/arrangement	Director	INR 1 Lakh OR
Sec 185 – Loan to directors/any other person in whom the director is interested/give a guarantee in connection with the loan taken by the director or such other person in contravention of the provisions of this section	Company Director/any other person to whom any loan is advanced or guarantee or security is given	Min: INR 5 Lakh Max: INR 25 Lakh	Max: 6 months
Sec 186-Contravention of provisions pertaining to loan and investment by the company.	Company and Every officer in default	Min: INR 25 thousand and Max: INR 5 Lakhs for a company and Max: INR 1 Lakh for every officer in default	Max: 2 years
Sec 187- Contravention by the company regarding investments of the company to be held in its own name.	Company and Every officer in default	INR 5 lakhs for a company and INR50 thousand for every officer in default
Sec 188 Contract entered into/ authorised in contravention with the provisions outlined under the section-Related party transactions.	Director/any other employee who had entered into or authorized the contract or arrangement in violation of this section	In case of a listed company, INR 25 Lakhs and in case of any other company INR 5 Lakhs
Sec 189 – Failure to disclose the interest of the director in any contract/arrangement in Register	Director	INR 25 thousand
Sec 190 – Failure to maintain a copy of the contract of employment with managing director or whole-time director/written memorandum in absence of a written contract & also failure to keep it open for inspection without fee	Company and Every officer in default	INR 25 thousand for the company and INR 5 thousand for each officer in default

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